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Robin Powell: It’s one of the big philosophical questions: Can money buy you happiness? A famous American study, conducted in 1978, showed the link between money and happiness is not as obvious as you might think. Chris Budd is an expert on financial wellbeing.
Chris Budd: They asked a bunch of lottery winners, and a bunch of people who had suffered a very serious accident, life-changing accident: “Were they happy before the incident and were happy after the incident?” Actually, whoever of either group said they were happy before, were also happy after it. In other words, the event made no difference.
Robin Powell: Of course, money can buy us things that give us pleasure — holidays, for example. It also gives us more options. But it’s certainly not the biggest contributor to human happiness.
Chris Budd: There’s a Harvard study of 900 or so people, young people. They asked them: "What will make you happy in the future?" And, they all said two things: money and fame. That’s what they predicted would make them happy. That was 75 years ago. They’ve been going back to this same group of people every two years, asking them are they happy and all sorts of questions around happiness. And, overwhelmingly, the answer that they’ve come up with is, that what makes us happy, is the quality of our social relationships. Not the quantity even, the quality. Even to the extent that they have seen, that lonely people die earlier.
Robin Powell: We’re all different. Some things may be more important to your happiness than they are to other people’s. Chris Budd says we should all work out, preferably with the help of a financial adviser, exactly what it is we want from life.
Chris Budd: Money is important, money does make us happy, but it’s an enabler, isn’t it? It makes us happy by enabling us to do things, it’s a tool. And, if we therefore work-out what will make us happy, we can, therefore, direct our money in the right ways. The way to work out what makes us happy is to, I think, use a third party. Because you can’t really challenge your own assumptions. We go through life with lots of self-limiting believes, with lots of things that we assume to be true, but, we need a third party to challenge us to find out what really might be true.
Robin Powell: So, if you haven’t already, try to identify what it is that really makes you happy. You might surprise yourself.